Similar to the internet, blockchain technology is sector-agnostic. However, similar to how internet applications differ from healthcare to automotive, blockchain’s innovation principles are expressed differently as well. One of the areas in which blockchain is increasingly being utilised is mobility.
Blockchain is a toolkit. A solution needs a problem. When solving your mobility challenge, consider this: Is blockchain uniquely qualified to solve this problem?
Thought leaders think blockchain will elevate the mobility game.
Alex Smout from InMotion Ventures commented:
“The rapid changes in the automotive and mobility sectors present many problems which benefit from the unique strengths of blockchain.
We’re seeing growth in trading and sharing of high value assets at the same time as disintermediation of “trusted” middlemen, meaning transparency and trust are critical. Smart, connected vehicles need to balance the need for security and control of data with market desire for connectivity and data access. And now, for the first time, OEMs, service providers and cities are having to collaborate on open standards to provide safe, sustainable services.
These trends, and dozens more, mean the mobility sector is already spawning legitimate investment opportunities with blockchain at their core, even with the current limitations of the technology.”
The Blockchain Toolkit
Smart contracts boost trust to an unprecedented level. The agreement only executes when both parties have fulfilled all requirements. Pen and paper contracts tend to be between two or multiple parties, may they be individuals or institutions. Smart contracts however are code, thus they can be person-to-person, person-to-machine and machine-to-person, unlocking new dimensions of value creation.
The ability of coding a set of characteristics to the ‘store of value’ that flows within your business elevates a one-dimensional product or service to an interactive platform, network or ecosystem. By designing crypto-assets for specific use cases you can stimulate desired behaviour, mobilising your community to add value to your business.
Transparent records of transactions stored on an immutable decentralised ledger are intuitively most valuable in low-trust environments. It becomes possible to verify statements, such as the number of cars in a fleet or the trackrecord of the driver.
Which Mobility Challenges Could Blockchain Solve?
Quite a few according to Chris Kirby, founder of Tomorrow’s Journey.
“Today mobility is heavily centralised with overly complex service layers that create waste and often offer a sub optimal product to consumers — blockchain has the potential to unravel this market.
There are three ways where I see blockchain impacting mobility. Firstly, creating a network of non centrally and fractionally owned, shared access vehicles. Secondly, the management of this network through a tokenised marketplace for a trusted community to carry out maintenance and movement tasks. Finally, creating a trust network for consumers to access shared vehicles using a verified digital identity.”
Mobility is evolving from a walled garden into an inter-connected web of relationships. What does this have to do with blockchain? We’ll first explore how useful blockchain is applied to a vehicle in isolation, and then we place it in an increasingly broader context, until we arrive at smart cities.
A Single Vehicle
- Absolute Information —This could be information the car gathers on itself, such as total mileage, weight or age. Alternatively, this could be information others gather on the car, think vehicle condition, workshop visits and repairs. Everything that contributes to resale value.
- Insurance — Using absolute information to recalculate risk premiums, and verify claims by resolving the circumstances of an accident.
- Fractional ownership — Car ownership is in decline, for with modern mobility services there is less need to own a car. As mobility services advance, and car ownership decreases, the question is: who will own the cars providing the mobility services?
- Payments — If we consider a vehicle in insolation, who could it possibly pay? Itself.
Is Blockchain Worth It?
Simply put, a blockchain ledger is a log of transactions. The first question rings: Do you need a shared, consistent database? The absolute information and insurance use cases would benefit from a single source of information. But, this would also be possible with a regular database.
Our next requirement asks records to not be amended or deleted. This reinforces the trustworthiness of the data source, and thus makes a blockchain-based solution a little more interesting.
Does more than 1 writer need to update the data? Yes, these use cases would benefit from multi-party collaboration. We’re slowly getting somewhere.
Now, are all writers trusted? About as far as you can throw them. The mobility sector is infamous for its lack of trust. Let’s consider a semi-decentralised consensus mechanism to validate the input on the ledger, such as Proof-of-Authority. Backed up by ‘real-world’ legal contracts, trusted parties, or nodes, obtain ledger writing permission when a set level of agreement is reached between these parties. Like a representative democracy, but with self-elected representatives and without the people.
That’s just the ledger. Back to our insurance use case. Insurance can become smart with smart contracts. Clauses can be activated by certain triggers, i.e. unsafe route or an un-authenticated driver.
Smart contracts have more applications. Confusingly, ‘the self-owning car’ is a car owned by multiple shareholders (institutions and individuals alike!). It’s called the self-owning car because it can ‘think’ for itself. It can do it’s own transactions and billing via smart contracts. The balance of the costs and revenues is then distributed among the shareholders, verified by the ledger.
The vehicle could also pay its own account to unlock temporary vehicle functions. Think of software functions such as cruise control or hardware functions such as EV battery acceleration boost. Tesla famously extended the range of some Florida vehicles for drivers to escape Hurricane Irma.
Interestingly, we’ve seen that even when considering a single vehicle in isolation, it pays not to discount blockchain benefits.
Vehicle — Infrastructure
- Absolute Information — This could be information the car gathers on infrastructure, such as charging efficiencies, road conditions, weather or air quality.
- Payments— The very first interaction vehicles won’t need humans for, is payments.
Is Blockchain Worth It?
Whenever one party interacts with another party, may it be a person or machine, the first question is: Who is this party and are they allowed to make the request they’re making? Recognising the trustworthiness of both the requester and the requested is the business of authentication.
The Hummels family undertakes a comfortable Europe road trip in their leased BMW 6. When leasing the car, BMW verified the identity of the parents (buyers) and by extension the temporary owners of the vehicle. When confronted with a toll-route in France, our Hummels family breezes through, not paying much heed. Under the hood, the toll infrastructure requests the identity of the vehicle, reads the BMW 6 authentication seal (4-passenger capacity, medium pollution, low road impact), calculates the toll fee, obtains only the information relevant for fee extraction from Mr. and Mrs. Hummels, and executes the payment. The Hummels BMW 6 crypto-asset account subsequently sees a fee deduction for toll way Paris-Bordeaux. Machine-to-Machine communication thrives on a need-to-know basis.
This is not fiction. The IOTA Foundation is currently working on vehicle payments to EV charging stations — more here.
When considering if it’s worth storing absolute information on the ledger, frequency is our key criteria. Some data, like traffic data, is only useful when tracked real-time. For this data type local councils are better off using a traditional database.
If we consider a use case such as grid distribution, we find a multi-party collaboration in a low-trust environment requirement. Furthermore, crypto-assets could be used as a tool to create an open ecosystem, further reducing customer adoption barriers.
Benjamin Sinram and Nicolai Bartkowiak, from Volkswagen Group IT, state:
“There is a lot of potential for blockchain applications in the Volkswagen Group, from maintenance, logistics and digital applications to specialised solutions such as tamper-proof odometer readings. Blockchain technology also offers a lot of opportunities when it comes to self-driving vehicles. It can protect cars from hackers better than other technologies, and help with automatic payments at fuelling stations or car washes.”
Not using blockchain when you should is as dangerous as using blockchain when you shouldn’t. Is blockchain uniquely qualified to solve the challenge?
Vehicle — Person
- Absolute Information— Consider information the vehicle gathers on its drivers and passengers: Acceleration speed, time spent driving (i.e. a bus driver), number of passengers or possession of driving licence.
- Data Ownership — Who owns the data directly connected to the individual in the car?
- Ride-sharing / Ride-hailing —The line between ride-sharing, ride-hailing and vehicle-on-demand blurs when you can customise your virtual identity to unlock permissions for the required service. We’ll see different use cases for the same vehicle, used by different individuals for different services at different times of the day.
- Vehicle financing— Can financial constructions such as leasing be de-risked?
Is Blockchain Worth It?
Individuals will, and need, to control identifiable data. Your identity is the most valuable thing you own. Virtual identities, like the BMW example, will act as verified identity proxies when engaging with services.
What do you need to know when somebody uses a P2P ride-hailing service? Let’s strip it back. Let’s say the person needs to be over 18, without a criminal track-record, owning sufficient funds for the service and with an average rating of 3 out of 5 stars. If a trusted third party can vouch for this information, in theory this will suffice for the utilisation of the service. When a service requires more complex information, the requested variables are adjusted. For example, identity can be augmented by social capital.
We asked: Can financial constructions such as leasing be de-risked? Partly. Verifiable social capital goes a long way to vouching for desired behaviour. Permission to use specific services can be retracted. Unlocking system can be deactivated. Due diligence can be simplified. In this case, blockchain’s usefulness very much depends on the solution construction.
When it comes to payments, Max Lomuscio, from DOVU, highlighted that tokenisation of the Mobility sector can also…
“…incentivise specific actions (safe driving, eco-driving, …) that add value to the whole community of citizens. Leveraging the permissionless technology, these token-rewards can then freely flow across different mobility services to promote an open and expanded MaaS ecosystem” .
Applying blockchain to the relationship between people and vehicles is arguable easier than to the relationship between machines. The latter requires a perfect solution, for alternatively there is a risk machines go rogue. The first allows for a more granular introduction, feeling the waters when implementing new use cases.
Vehicle — Vehicle
- Absolute Information — This could include information the vehicle gathers on other cars, such as traffic jams, accident detection or early warning signs of erratic driving patterns.
- Autonomous Fleet — What happens is our ‘self-owning car’ construct is applied at scale?
- Payments — We can imagine use cases where vehicles are required to communicate and negotiate with other vehicles.
Is Blockchain Worth It?
Because of its real-time nature, this type of absolute information is not a perfect match for the blockchain ledger. However, it can act as triggers for smart contracts or other vehicle prompts, i.e. a toll fee increase in case of heavy traffic.
It is key to remember that when we talk about unmanned vehicles, we are not just talking about cars. The blockchain will expedite automatically executed transactions among vehicle owners, operators and third-party service providers by utilising a single source, usage-based payment system.
Even in vehicle: vehicle payments authentication plays a role. Again, is the requesting party authorised to make a request? In platooning several vehicles drive behind each other in very close distance. Safety is ensured by the communication of the involved vehicles and the real-time exchange of sensor data. Another example is negotiating right of way, when one vehicle, like ambulance on its way to the hospital, needs to assume priority over an another, such as a commuting civilian.
If we envision the future of mobility to be shared, blockchain can not be excluded from the conversation.
The Smart City
We’ve identified the different pieces of the puzzle, but how to complete the jigsaw?
- Blockchain-based identity (for machines and individuals!) will be the key puzzle piece to unlock mobility services at scale.
- The line between mobility services blurs when you can customise your virtual identity to unlock permissions for the required service. We’ll see different use cases for the same vehicle, used by different individuals for different service purposes at different times of day.
- If we envision the future of mobility to be shared, blockchain can not be excluded from the conversation.
- Machine-to-Machine communication thrives on a need-to-know basis.
- Value is created in a different way, therefore value needs to be extracted and measured in a different way.
- Expect OEMs and other mobility players to move towards the Standard Agreements | Open Developer Platform quadrant. The current innovation approach won’t hold.
The mobility sector is already on the road to disruption. This transformation is only possibly thanks to the combined efforts, expertise and forward thinking of industry players.
A such example is MOBI (Mobility Open Blockchain Initiative), a consortium of blockchain and mobility industry leaders that work together on realising the potential of the tech. The importance of this partnership is underscored by Alisa Maas, the Head of Mobility and Automotive at IOTA Foundation.
“IOTA’s edge technology offers endless opportunities, but the translation into real business value is driven by the industry and will evolve over time.
This is why the IOTA Foundation is working together with the industry on use cases, Proof of Concepts and pilots to further develop the IOTA technology and at the same time facilitates the creation of smart business models and value added services in disruptive areas such as new ownership models, e-mobility and centralised platforms.”
Similarly, Sinram and Bartkowiak, from Volkswagen Group IT (as mentioned in this article) not only study concrete applications themselves, but also have built up a network of nearly 300 employees in the organisation, across all the brands, who exchange ideas on this topic and meet multiple times a year.
“Our contacts among the different brands enable us to work very efficiently. The atmosphere is open, and we’re happy to include interested individuals from any department.”
This is the beauty of the Blockchain ecosystem: it brings together the brightest minds from different companies, sectors and backgrounds to reimagine whole industries.
Even-though we discussed many use cases, this list is by no means comprehensive. What are you working on? Anything we missed? We would love to hear from you.